And this isn't just insurance. Just because someone who work is being made for by law or by rule says that their work output reduces the failure rate from X to Y doesn't mean that the cost of their work when applied to everything isn't a massive loss compared to just not paying for that and cleaning up the mess X times instead of Y times.
You can appeal to emotion all you want but it's a very simple calculation. Heck, health insurance (in the US) serves a pretty obvious counterpoint.
Examples: Leaded gas, tobacco, CO2 emissions, dam breaks, reactor meltdowns, air pollution (really pollution in general; river/groundwater contamination for your septic tank example)...
If you underregulate, you end up with frequent cases where not even imprisoning and dispossessing everyone remotely involved/culpable is gonna get you sufficient compensation; this is extremely undesirable.
Companies are frequently gonna steer towards such scenarios, too, because they can allow them to externalize costs.
As someone from a random developing nation car accidents deliver crippling debt and destroy lives there frequently because insurance is not mandatory.
The developing nation blindly ignore the externalities of not having insurance (instead of spreading the cost throughout society, only a few people bear the brunt of it, usually the ones least equipped to handle it), so your example is great only if you assume its fine to continue to beat down the poor. There's a reason developed nations have developed such "red tape" and the anti-vaccine movement here in the US is finding out what happens when the red tape is removed.